Sounds fairly reasonable to me. The pumps you found on line are probably from a warehouse sales outfit with very low overhead. Your local pump dealer likely pays almost that much the pump, so has to sell it for considerably more to make a profit. The labor likely is for two men and a truck for several hours. This whole question is very much like replacing a water heater. If you can DIY you can buy the heater for say $500. You're out $0 for labor. But if you hire a plumber to furnish and install the heater, the total cost may be $1500-$2000. Sure, it's a lot of money, but that's because of his overhead and profit margin. The reason many of us are DIYers is not because we necessarily feel the plumber is ripping us off, it's simply because we are able to do at least some of these jobs ourselves even though sometimes we get in over our heads. That's when the Dirty Harry adage enters the picture: "A man's got to know his weaknesses."

When the irrigation company came to turn on the system for the spring, they claimed that the pump was not working and needed to be replaced. Apparently there was little or no water pressure in the lines to the sprinkler heads, and when they tried priming the pump, water was leaking into the garage.

I'm assuming that they felt the pump was broken beyond the point of repair.

Call a pump company. Irrigation guys are generally not pump experts. Important is to isolate a pump from the sprinkler system, so the pump can be evaluated on its own. A lot of sprinkler system designs leave this out, and a bunch of stuck-open zone valves might look like an under-performing pump.